Published by Jessica Weisman-Pitts
Posted on April 13, 2022
5 min readLast updated: February 7, 2026
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By Andrew Stevens, Principal – Banking and Financial Services at Quadient
It has taken a number of years, but many aspects of the Strong Customer Authentication (SCA) regulation have finally become mandatory across banking and retail in the UK. The new rules are designed to keep customers safe when shopping online and ensure their money is better protected. The changes meana that whenever customers buy something online, they will be asked to verify their identity through two-factor authentication – for example, through their banking app or a one-time passcode via text or phone call.
A journey that began before the pandemic has now reached its destination, as we pass the final deadline for retailers. Beyond March 2022, all non-compliant transactions will be declined. Many of us have become used to verifying our identity when purchasing something online, for example through a banking app, or a one-time passcode via text or phone call. However, it’s important to remember there are also many less digitally-savvy consumers that may be unaware of the additional layer of authentication now required of them when transacting online. If they were not aware of SCA rules and suddenly start having transactions declined, these people are likely to become frustrated, pointing the finger of blame at their bank or card issuer.
Friction brings frustration
SCA will be required for every online purchase, and will help protect consumers from the growing threat of online fraud. But in many cases, the regulations simply haven’t been effectively communicated to customers. The average person doesn’t keep up with banking regulations, so when a bank-branded screen pops up to interrupt their purchase, they may be quick to accuse their bank of adding unnecessary steps to the customer experience. Although the SCA rules affect banks and retailers equally, seemingly constant requests for consumers to verify payments with their card issuer can lead to damaged customer perceptions and even negative social media posts.
Consumers are likely to wonder why the process used to run smoothly, but they are now being asked to jump through hoops just to make a transaction. If consumers don’t know the exact background and reasons for the change, their ignorance could easily lead to ruined reputations for banks. People need to be aware of the SCA regulations, why they’re being implemented, and know how to avoid any authentication issues. I If they get a new phone or change their mobile number people may have to spend hours getting multiple accounts up and running again, meaning the potential for frustration is massive.
Education is key
Explaining to consumers that SCA is now a legal requirement and that it is intended to protect consumers from fraud can go a long way to dispelling frustration. This should be communicated over different platforms depending on customer preferences. For instance, while interacting with customers about SCA via email or SMS will work for some, others may still prefer a written letter.
Banks can also take this one step further and inform consumers how to ensure their authentication experience is smooth. For instance, if a device is required to authenticate, what happens if customers change their phone number or buy a new mobile? Are there other authentication options available? In this area, it’s clear that neobanks have an easier job on their hands. Their customer bases are already used to biometrics and a completely digital banking experience; with Monzo, for example, customers can’t sign-up for an account without recording a video selfie. By contrast, traditional banks face a more diverse range of customers, all with varying levels of digital comfort.
Two-factor authentication simply isn’t going to be intuitive for each individual customer, and some will need more support and guidance as they go through each step of the process. Just like offering different communication methods, traditional banks should also consider having a variety of ways that users can authenticate their transactions. For example, for older or less digitally-savvy customers, banks could offer a phone call service that shares a code to type in online. Having different authentication channels also helps in the event another method is unavailable or inaccessible – such as if a customer changed their mobile device or phone number without updating the bank.
Better communication builds customer confidence
While customers may become frustrated if not properly informed about SCA, they are likely to understand the benefits of the regulations once communicated to them. With fraud on the rise, people are highly unlikely to object to more secure online transactions that keep them and their money safe. However, if they don’t understand the intentions of SCA, customers are likely to lay the blame at their bank’s feet if transactions are declined and consumers are left without the convenience of being able to shop or bank online. It is therefore critical that banks explain these regulations clearly, through the right channel and give different authentication options to customers. This will not only strengthen confidence in their ability to keep consumers safe online, but also show their willingness to make the authentication process as easy as possible.
Strong Customer Authentication (SCA) is a regulatory requirement that mandates two-factor authentication for online transactions to enhance security and protect consumers from fraud.
Two-factor authentication is a security process that requires two different forms of identification from the user to verify their identity, typically combining something they know (like a password) and something they have (like a mobile device).
Online transactions refer to any financial exchanges conducted over the internet, including purchases, payments, and transfers, typically involving credit or debit cards.
Consumer education in banking involves providing customers with information and resources to help them understand financial products, services, and regulations, enabling them to make informed decisions.
Fraud in banking refers to illegal activities aimed at deceiving individuals or institutions to gain financial benefits, often involving the unauthorized use of personal information or financial resources.
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